Will the MGM get MANDALAY BAY?

[Fishhead]

MGM Mirage Raises Bid for Mandalay Bay
By ADAM GOLDMAN, AP

LAS VEGAS (June 14) - MGM Mirage Inc. has raised its bid for rival casino operator Mandalay Resort Group only days after its previous offer was rejected as insufficient, pushing ahead with its effort to create the biggest gambling company in the world.

MGM Mirage said Monday the two sides had agreed on ''all material terms'' of the revised $4.8 billion cash offer after intense weekend discussions.

Mandalay said it hadn't entered an agreement but said the new terms would ''offer significantly greater assurances of closing'' for its shareholders. Mandalay will present the revised offer to its board Tuesday.

Under the latest offer, MGM Mirage would pay $71 per share in cash for Mandalay stock, up from its earlier offer of $68 a share.

MGM Mirage said the cash price represents a 30 percent premium to Mandalay's closing share price on June 3, the day before the company's initial offer was made.

Shares of MGM Mirage fell 60 cents to $47 while Mandalay shares lost 92 cents to $67.50 in afternoon trading Monday on the New York Stock Exchange.

In addition to the $4.8 billion in cash, MGM Mirage said the new deal would include $600 million in convertible debentures and that it would assume $2.5 billion in debt.

John Mulkey, a Bear Stearns gambling analyst in New York, said it appeared Mandalay would accept the deal.

''We believe that management for both companies hammered out their differences over the weekend and that Mandalay's board is likely to approve this final proposal,'' Mulkey wrote Monday in an investor's note.

In rejecting the previous bid on Friday, Mandalay's president and chief financial officer Glenn Schaeffer said the terms had ''asked Mandalay shareholders to bear a far disproportionate share of the risk'' and was not in their best interest.

The deal killer was a demand by MGM Mirage requesting a 15-month option to pull out of the agreement. During that time, Mandalay would have been prevented from making any financial or strategic moves.

MGM Mirage would have paid a $100 million breakup fee if the deal didn't close in 15 months.

A source close to negotiations who spoke on condition of anonymity said Monday that MGM Mirage had withdrawn that option.

Any deal would need approval by federal regulators as well as by regulators in Nevada and other states in which the two have casinos.

This is the second high-stakes buyout effort orchestrated by 87-year-old billionaire Kirk Kerkorian, who controls MGM Mirage. Kerkorian bought casino developer Steve Wynn's properties in 2000. MGM Grand and Mirage Resorts agreed on a $4.3 billion deal and assumed $2.1 billion in debt only after the offer price was increased. Negotiations in that deal lasted six months. Kerkorian ended up paying $21 per share after making an original offer of $17 per share.

MGM's properties include the MGM Grand, The Mirage and Bellagio. Mandalay owns and operates 11 casinos in Nevada, including Mandalay Bay, Luxor and Circus Circus.

A combination of the two companies would give MGM Mirage control of 10 properties on the Strip, owning about half the 73,000 hotel rooms of the world's most lucrative gambling market. The company would surpass rivals Harrah's Entertainment and Caesars Entertainment, with more than $6 billion in revenues.

MGM Mirage owns or operates 12 casinos in Nevada, New Jersey, Mississippi, Michigan and Australia, and has investments in two other resorts in Nevada and New Jersey. It has a 25 percent interest in British casino developer Metro Casinos Ltd.

Mandalay Resort Group has about 15,000 rooms on the Strip. It has ownership in other properties in Nevada, Illinois and Michigan, and owns a hotel-casino in Tunica County, Miss.

 

[packer2012]

I don't see any way the regulators can let that go through.

That assumes of course that there is any real form of regulation. I have my doubts there is.

Big corporations in Nevada get pretty much whatever they want.

Steve Wynn will still open up and cripple them all on the really high end whale business. No way they can stop that! But this merger would surely be horrible for the consumer in that it will really limit competition.

 

[WildBill]

Regulators that would have the biggest say are the FTC, not the state regulators. The FTC has been putting its nose into some casino markets, most notably Harrahs concentration of casinos in Chicagoland. They haven't done much yet, but I think it is certain they make at least a little noise here. It wouldn't be tough though for the merged entity to dump off a few casinos to get under the wire, the Circus being the obvious choice, Motor City in Detroit is almost as good as sold in this scenario, and if necessary even the Treasure Island could go and not be missed all that much.

 

[superstar]

The state gambling commission just okay'd the buyout of Boyd Group by the Coast casinos. For the past twenty years, Vegas has experienced major consolidation by a few key players. I don't know if the State Gaming Commission would okay this deal, but MGM Mirage put a lot of work into it and they must think that the Gaming Commission would give the okay. If it passes, MGM/Mirage-Mandalay Bay would own over half of the 72,000 rooms on the Strip, and that includes the "good" part of the strip - South side, where all the action is. They would control almost the entire block of Las Vegas Blvd. between Hacienda and Flamingo, almost to Spring Mountain. Going from South to North, you have the following: Mandalay Bay (Mandalay Bay flagship casino), Luxor (MB), Excalibur (MB), MGM, New York, New York (MGM), Monte Carlo (jointly owned by MB and MGM), Bellagio (MGM), Mirage (MGM), and Bellagio (MGM). The only properties inside that large block not owned by MGM/Mirage/Mandy would include Tropicana (independent), Aladdin (on the verge of bankrupcy for years), Bally's/Cesars/Paris (decent, but not world class), IP (Piece o' crap), and Harrahs. It pretty much means all the prime casinos are going to be owned by one company. That screams anticompetition to me.

 

[ballistik]

Will be interesting because they will not be able to own 2 casinos here in Detroit.

 

[WildBill]

The State's regulators are likely to look at it in the picture of all of Las Vegas' casinos or even the whole state. The likely response is to be that it isn't a license restricted state and therefore they likely won't force any divestiture. If necessary they might require some casinos to be sold, but that likely will begin with Circus Circus, something MGG will have no qualms about. They might also have to sell their properties at Primm because those along with the Jean properties owned by MBG would encompass 100% of that particular market, although no one worries too much about that on a competitive basis. Still the biggest hurdle these days is the FTC, a federal viewpoint which has been more aggressive about limiting views to a geographical area. They will have to decide if the entity has the power to raise prices without much competitive considerations and that is an argument that is highly unlikely to win. So other than the near certain sale of a Detroit property this might go through with nothing else being a requirement for sale. Beyond that, it is likely in a few years that some of the non-core holdings such as Laughlin, Reno, and Tunica could be spun off or sold.

 

[RIOSHILL]

Less sportsbooks

 

[ChuckSims]

Mandalay sportsbook will now just be a satellite book. Sad because the MGM/Mirage book is terrible.

 

[superstar]

"Monopoly is just a game, I'm trying to rule the f!#!@#'n world!" - Robin Williams on Bill gates.

 

[AskHerman]

I think if MGM made a play for Caesars they would be getting more control in Las Vegas as well as picking up a few joints in Atlantic City. Caesars is trading at 14.2 with a market cap of 4.4 billion vs Mandalay Bay with a market cap of 4.56. MGM is banking on Vegas by doing this deal to aquire Mandalay Bay.

 

[ChuckSims]

Mandalay Bay has huge convention space, thats what the MGM/Mirage wants.

 

[AskHerman]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Chuck Sims:
Mandalay sportsbook will now just be a satellite book. Sad because the MGM/Mirage book is terrible.<HR></BLOCKQUOTE>

Over 90% of Nevada sportsbooks are sh-t but no place takes it to another level like The Silver Legacy Mike Pinto is the bigget jerk off in the business.